Analysis: What a long-term deal means for the Australian GP

Melbourne has secured the long-term future of the Australian Grand Prix with a new agreement that expands until 2023. But what does the new deal mean for the future of the event? Kate Walker explains.

Earlier this month it was announced that the Australian Grand Prix Corporation had managed to secure an F1 contract extension until 2023, giving Melbourne the rare opportunity to apply long-term strategic planning to their approach to the grand prix.

With the majority of race contracts running for around five years, host cities and countries are often deprived of the opportunity to make real long-term improvements to their events, as the length of each contract can make it challenging to secure local funding for development projects. For every race, no matter how mature or successful, always has room to improve.

But even the popular Australian race isn't perfect. Despite Melbourne's appeal as a tourist destination, the lack of hotel stock drives up prices to the extent that it is cheaper to stay in Monaco during the grand prix than it is Melbourne.

The issue is one the race organisers are aware of, and the eight-year contract extension has finally allowed the city to act.

Motorsport.com spoke exclusively to Victorian Minister for Sport, Tourism, and Major Events John Eren and Australian Grand Prix Corporation Chairperson John Harnden about their plans for the future of the Albert Park race, and how the grand prix fits into Melbourne's wider sporting portfolio of high-profile, international events.

Melbourne has long benefitted from its position at the beginning of the calendar - after the winter break, the return of Formula One is something to get excited about, and every team arrives at the first race of the year a potential race winner or championship contender. Albert Park is a scene of boundless optimism, of enthusiasm from fans and F1 folk alike.

"What's really, really great is because we're the first race, people get [to Melbourne] early," Harnden said. "They want to come, the want to acclimatise. In a funny way, while it's a long way away, because of the time zone differences and getting yourself adjusted that also means people tend to come a bit earlier as well to have a holiday."

"They stay on for a few days [after the race] and that increases our percentage of international visitation," Eren agreed. "So we're now second in the nation. We've just taken over Queensland in terms of international visitation, and we've had 14 percent growth in that area. We're growing all the time, and this is one of the reasons why."

"I think [the extension] gives us firstly a great opportunity to plan for the future and gives everyone surety," Harnden explained. "Eight years is a long time, and for us it's about really focusing on the fans but also expanding the reach of our race into Asia.

"The growth of Formula 1 into Asia over the last ten or fifteen years has been huge, and the fan base has grown enormously. So the Minister [Eren] and ourselves, we really see there's a great opportunity to not only spread the word about Melbourne, but to get more and more people to come down to Melbourne, exactly like they do for Singapore."

"It's almost like a chain reaction of people going out there and spreading the word," Eren confirmed, "which is why it's so important for us for the long-term to have that surety and to really be able to focus on growing, you know, the Asian profile and getting people down to Melbourne."

The focus on building Melbourne's appeal in the Asian market while increasing the number of major events across Victoria has highlighted the need to improve the city's hotel stock, particularly in the five-star market, Eren conceded.

"I think there's a real need for some five-star accommodation as the Asian market grows," he said. "They really like the five-star hotel accommodation, and we're acutely aware of that. We're trying to rectify it.

"We are the sporting capital of the world and we're the events capital of the nation and we're the most little city. Everybody wants to be [in Melbourne], because we've got the best of everything! [Improving the hotel situation] is clearly on our agenda."

Eren and Victorian Premier Daniel Andrews this year announced that an additional AUS$80 million had been allocated to the state's Major Events fund, a decision that Eren explained was aimed at providing "some surety to the Hospitality Industry and Accommodation Industry that we're serious about having major events in Melbourne".

They know that we've got a lot of events happening between November and April, but between April and October there's a bit of a lull, so that money will go a long way to fill in that calendar in terms of events.

That gives them some confidence going forward in wanting to build hotels and accommodation.

"As the Minister for Sports and Major Events," Eren continued, "in terms of synergies all of these things work well together. The department can do some long-term planning.

"One of the good problems that we've had – I suppose nevertheless a problem – earlier this year with the Australian Tennis Open and also having the Asian Cup, we couldn't really bid for the Final because we didn't have enough rooms to cater for the people.

"This [additional AUS$80 million] will mean that there's confidence in the sector. Already the Minister for Planning has signed off on some $3.6 billion worth of development in the past six months, which is a record amount, and that's increasing all the time."

The desire to bring more of the Asian market to Melbourne has also led to deeper cooperation between the Australian city and Singapore, the F1 standard-bearer when it comes to turning a grand prix into a profitable and tourism-boosting enterprise.

"We've got a cooperation with the Singapore government," Eren said. "We will open a business office [in Singapore] in the next few months - they're our fifth largest market and clearly we want to have great relationship with Singapore in terms of trade and - in particular - tourism.

"I had a meeting with the Minister [during the Singapore Grand Prix week], and we spoke about some common things in terms of what we can do together to improve our collective. They were great discussions that we had."

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About this article
Series Formula 1
Event Australian GP
Track Albert Park Circuit
Article type Analysis